What are the factors that affect the price of gold? What is the relationship between the gold price and foreign exchange?

What are the factors that affect the price of gold? What is the relationship between the gold price and foreign exchange?

Gold is a relatively stable currency and a universal currency in the world. Although the value of gold is relatively stable, its price is also affected by many factors. This article will introduce the factors that affect the price of gold and the relationship between the price of gold and foreign exchange. Friends who do foreign exchange investment may wish to take a closer look.

Factors that affect the price of gold

Political Factors. Gold is called natural currency, and in all countries and dynasties around the world, gold is used as a natural currency. The risk-averse attribute is one of the important attributes of gold. In the special period of national political instability, the price of gold will rise accordingly. On August 19, 1991, when the Soviet Union disintegrated, the price of gold rose by more than 10 US dollars within 3 minutes. During the Gulf War in 1992, the price of gold at that time was stable at US$400. When the war gradually subsided, the price of gold dropped rapidly, and the price of gold dropped by more than US$50 within six months.

macroeconomics. Since the U.S. dollar has become the mainstream currency in the world, the price of gold has been closely linked to the U.S. dollar! That is if the U.S. economy improves and the U.S. index rises, the price of gold will fall. Conversely, the US dollar index fell and the price of gold rose. Secondly, the price of gold is also related to the price index and inflation rate in the United States, that is, the price index rises, the inflation rate rises, and the price of gold also rises. That is, the price of gold has a positive correlation with the US price index and inflation rate.

Supply and demand. Although gold is called natural currency, its essence is also a commodity. Since it is a commodity, it will follow the inherent price principle of the commodity. When the market demand for the commodity continues to increase, the commodity price will rise. The reverse is also true.

oil relations. The price of gold is also directly related to another important commodity, that is, the price of oil. As we all know, the world, whether oil spot or oil futures are priced in US dollars. Changes in oil prices, on the one hand, reflect the supply and demand of oil, but also reflect changes in the dollar. The US index rose, crude oil prices fell, and gold prices fell!

The relationship between the gold price and foreign exchange

The gold market and the foreign exchange market have attracted the attention of investors due to their relatively complete, fair, fair, and more investment opportunities, and more and more investors have joined the foreign exchange and gold markets. However, the gold market and the foreign exchange market are ever-changing, and returns and risks are like twin brothers. By understanding the mutual influence and function of the two markets, you may be able to discover many new investment opportunities. The editor of the spot home tells you how close the relationship between gold and foreign exchange is.

Both the gold market and the foreign exchange market have their price fluctuations affected by some of the same factors. The current trend of globalization and integration of the world economy continues to strengthen, bringing about the great integration of the world's financial markets. International capital can flow freely and rapidly among various markets, thereby further connecting various markets around the world. The price fluctuations are closely related to each other. For the world's largest market - the foreign exchange market (measured by trading volume) and the most historical gold market, the two are inextricably linked, and their respective price fluctuations and market changes have certain implications for the other market. Influence.

Gold and foreign exchange are closely related. What is the impact of the foreign exchange market on the gold market? Since the world gold market is priced in US dollars, the fluctuation of the US dollar exchange rate in the foreign exchange market has a great impact on the price of gold. According to historical data statistics in the past 10 years, the price of gold has a negative correlation of about 80% with the exchange rate of the US dollar. Generally speaking, when the dollar rises, gold falls; when the dollar falls, gold rises.

There are several reasons: First, the rise and fall of the US dollar represent the market's confidence in US dollar assets. The rise of the US dollar can attract funds to buy US dollar-denominated assets for profit, and the fall of the US dollar means that some funds lose confidence in US dollar assets and turn to gold in order to preserve their value and make profits. The second is the fall of the US dollar, which means that the exchange rate of currencies such as the euro and the yen has risen, so the gold price in the domestic gold market in the euro and the yen is relatively cheap and attracts investors to buy. The inflow of these funds naturally pushed the price of gold up.

The impact of gold price fluctuations on the foreign exchange market is mainly reflected in the impact on commodity currencies. The main characteristics of commodity currency countries are high-interest rates, the high proportion of exports in GDP, major producers and exporters of some important primary products, and their currency exchange rates moving in the same direction as a commodity (or gold price). The main commodity currencies are the Australian dollar, Canadian dollar, New Zealand dollar, Norwegian krone, and South African rand. As an important commodity, the rise and fall of the price of gold also have a certain impact on the commodity currency. Generally speaking, the rise of gold price can drive the rise of commodity currency exchange rate, especially for important gold exporting countries such as South Africa, it is a positive factor. In recent years, the price of gold has risen sharply, and the exchange rate of the South African rand has also risen.

Both the foreign exchange market and the gold market have their price fluctuations affected by some of the same factors. The current trend of globalization and integration of the world economy continues to strengthen, bringing about the great integration of the world's financial markets. International capital can flow freely and rapidly among various markets, thereby further connecting various markets around the world. The price fluctuations are closely related to each other. For the world's largest market - the foreign exchange market (measured by trading volume) and the most historical gold market, the two are inextricably linked, and their respective price fluctuations and market changes have certain implications for the other market. Influence.

This article focuses on the factors that affect the price of gold and the relationship between the price of gold and foreign exchange. It can be seen that the price of gold is not eternal, it is also affected by the international environment, and changes in the price of gold directly affect the exchange rate, so it also affects foreign exchange investment, because foreign exchange investors also Need to pay attention to the changes in the price of gold.